Hazard function by gender, TWA employment
Tab 7: Proportional hazard model for transitions to permanent employment, piecewise baseline hazard
Pre reform period (1992-1997) Post reform period (1997-2002) All sample Female Male All sample Female Male North-west 0.137***
(3.09) North-east 0.076
(1.54) Agriculture 0.315
(1.52) Metal industry 0.493***
(9.17) Construction 0.613***
(3.16) Commerce 0.501***
(5.29) Communication 0.638***
(13.79) Note: the table reports the coefficient estimates of a piecewise constant baseline hazard model and the test z are reported in parenthesis. All specifications control also for foreign status, white-collar, blue-collar and economic growth. *** Significant at 1%,
** significant at 5% and * significant at 10%.
The first important result worthy of a note is that both for women and men the estimated parameters of the baseline hazard for temporary employment duration are substantially lower in the post reform period, in this sense confirming the hypothesis widely discussed in the previous section that the Treu package has reduced the degree of duration dependence in the hazard rate of moving out of temporary employment. Baseline hazard coefficients in both periods exhibit more or less a positive value, with some exceptions. In particular the baseline parameters are positive for the first two time period. After the second period, however, the baseline hazard estimates are found to be negative, mainly in the post reform period. This tendency lasts until the sixth-seventh time period, implying a negative duration dependence in this interval. Even more pronounced, after the seventh time interval, is the change in sign in the baseline hazard coefficients which become strongly positive and volatile, mainly for women.
The last robustness check is summarized in table 8 which compares two model both for men and women, the first is a traditional piecewise baseline model while in the second each piece of the baseline hazard is interacted with a reform dummy in order to test whether the Treu package has proportionally shifted the hazard rate. The estimated coefficients imply a rather strong negative effect of the reform on hazard rate equally distributed by gender, resulting in a well-defined and proportional reduction of each piece of the baseline hazard. In conclusion, results from semi-parametric baseline hazard tell a slightly different but more appealing story. Indeed, the hazard estimates are positive initially, then decline moving to negative duration dependence in the central time interval and finally increase substantially, reproducing the positive duration dependence already observed in the Weibull model.
In addition, the results with respect to other explanatory variable for both specifications (tables 7 and 8) are in accordance with one of the main implication of job-search theory and with the estimates discussed in the previous section.
6. Conclusion
The empirical evidence that the average hazard rate from temporary employment (towards a permanent work) rises with its duration is typically interpreted in literature as strong evidence for the hypothesis of positive structural duration dependence. This paper attempts to study the duration of temporary employment, focusing on the exit margin, and to investigate whether the introduction of Treu package in the 1997 has modified the duration dependence pattern in the probability of moving from a fixed-term work to a stable job.
Tab 8: Proportional hazard model for transitions to permanent employment, piecewise baseline hazard
Piecewise Baseline Hazard Piecewise Baseline Hazard Interacted with the reform dummy
Female Male Female Male North-west 0.251***
(7.00) North-east 0.010
(0.26) Agriculture 0.207
(1.32) Mining industry 0.364***
(7.41) Metal industry 0.341***
(7.43) Mechanic industry 0.270**
(2.49) Construction 0.209*
(1.68) Commerce 0.239***
(3.63) Communication 0.295***
(8.39)
are reported in parenthesis. All specifications control also for foreign status, white-collar, blue-collar, a reform dummy and economic growth. *** Significant at 1%, ** significant at 5% and * significant at 10%.
Indeed the partial labour market reform and the liberalization of flexible contracts in the Italian labour market have attracted the attention of many researchers and policy-makers. Empirical studies have tried to assess whether temporary jobs provide a stepping-stone towards a stable employment or an endless trap in the precariousness, but mixed employment effects do not provide a clear signal on the good performance of the flexible contracts in terms of subsequent careers and wage.
Parametric and semi-parametric continuous time duration model have been employed to study the duration of temporary work spells and to control for the unobserved heterogeneity, exploiting a large administrative dataset for the ‘90s. As already discussed, the results obtained indicate that accounting for unobserved heterogeneity does not matter and the estimated parameters with regards to duration dependence remains basically unchanged.
The main findings emphasize how the Treu reform has significantly reduced the duration dependence parameters in the probability of transiting from a temporary work to a permanent job and that this result is robust to different specifications adopted for the baseline hazard, both parametric and semi-parametric. Moreover, results on positive duration dependence might indicate the existence of a human capital accumulation effect, as suggested in other empirical studies. The reduction in duration dependence differs markedly with respect to observable characteristics and it is larger for women and white-collar in the post reform period.
An even stronger conclusion could be drawn, concerning the analysis for specific contract types:
once I have controlled for different contractual arrangements, positive duration dependence in the employment hazard rate disappears or even becomes negative, at least for the temporary work agency (TWA) employment. This might indicate that for interim work the duration of the work spell affects negatively the hazard rate of moving into a permanent employment. Given the somewhat restrictive information of the dataset, more research to test for the robustness of the negative duration dependence in TWA employment seems warranted. Finally I conclude emphasizing the role of individuals’ heterogeneity in terms of personal and job-related characteristics in explaining a large amount of differences in hazard rates and, more in general, in labour market chances.
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